Whether states charge sales tax on shipping and handling depends on the destination state and, in many states, on how the charges appear on the invoice. Some states tax delivery charges whenever the underlying item is taxable, no matter how they are labeled. Others exempt shipping when it is listed as its own line item. And handling is treated differently from shipping in several states, remaining taxable even when the shipping portion is not.
States That Tax Shipping on Any Taxable Sale
In these states, if the item is taxable, so is the delivery charge. Separating it on the invoice makes no difference.
New York taxes any charge for shipping or delivery that a seller includes on the bill when the product being shipped is taxable, including amounts labeled as transportation, handling, or postage. Even a separately itemized third-party carrier charge is taxed. The one exception is a delivery the buyer arranges and pays for independently through a separate transaction with a carrier, which counts as its own transportation service.1New York Department of Taxation and Finance. Shipping and Delivery Charges
Texas taxes all transportation or delivery charges billed by the seller when connected to a taxable sale, even if stated separately. That covers freight, shipping, delivery, and postage, both before and after the sale is finalized.2Legal Information Institute. 34 Texas Administrative Code 3.303 – Transportation and Delivery Charges
Georgia taxes delivery charges on taxable property whether the charge is optional or separately stated.3Fastcase. Georgia Regulation 560-12-2-.45 – Freight, Delivery and Transportation
Pennsylvania taxes separately stated delivery charges tied to a taxable sale, including postage the seller passes on to the buyer. The charge escapes tax only when the sale itself is nontaxable (for example, items purchased for resale) or when someone other than the seller both handles and bills for the delivery.4Pennsylvania Code and Bulletin. 61 Pennsylvania Code 54.1 – Delivery Charges
Minnesota treats all delivery charges as part of the sales price, including crating, handling, packing, shipping, and transportation, even when separately stated.5Minnesota Department of Revenue. Delivery Charges
States That Exempt Shipping When Separately Stated
Other states let sellers exclude delivery from the taxable amount as long as the charge appears on its own line. Each state attaches its own conditions.
California
Separately stated shipping is generally exempt, but only when the shipment moves through a carrier the seller does not own, such as USPS, UPS, FedEx, or another common or contract carrier. Delivery using the seller’s own trucks is taxable. The exempt amount also cannot exceed what the seller actually paid the carrier.6California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Regulation 1628 Handling is always taxable. A single line labeled “shipping and handling” preserves only the true shipping portion; anything above that is taxed.7California Department of Tax and Fee Administration. Shipping and Delivery Charges (Publication 100)
Florida
Transportation is exempt only if two conditions are met: the charge is separately stated, and the buyer could have avoided it, for example by picking up the item in person. If shipping is the only way to receive the goods, the charge becomes taxable even when listed separately.8Legal Information Institute. Florida Administrative Code R. 12A-1.045 – Transportation Charges
Illinois
Transportation and delivery charges are excluded from the taxable selling price when the seller and buyer agree on those charges separately from the price of the goods. Folding delivery into the item’s listed price pulls it into the taxable total.9Legal Information Institute. Illinois Administrative Code Title 86, 130.415 – Transportation and Delivery Charges
Maryland
Separately stated shipping is deductible before calculating sales tax. Combine shipping and handling into one line, though, and the entire charge becomes taxable. A line labeled only “shipping” preserves the exemption; “shipping and handling” does not.10Comptroller of Maryland. Business Tax Tip #8 – Calculating Maryland’s Sales and Use Tax
Michigan
Under Public Acts 20 and 21 of 2023, delivery charges are no longer part of the taxable sales price when the seller states them separately on the invoice and keeps records showing the delivery charges as separate transactions.11State of Michigan Treasury. Changes in the Taxability of Delivery and Installation Charges
Virginia
“Transportation charges separately stated” are exempt under Virginia’s service exemptions statute. Bundle delivery into the item price and the entire amount becomes taxable.12Virginia Code Commission. Virginia Code 58.1-609.5 – Service Exemptions
Why Handling Is Treated Differently
Even in states that exempt shipping, handling charges are almost always taxable. Shipping is the cost of physically transporting a package from the seller to the buyer through a carrier. Handling covers the labor and materials the seller uses to prepare the item for transit: wrapping, boxing, labeling, and similar work. States view handling as part of completing the sale rather than an independent transportation service.
That distinction is a practical trap for sellers who lump the two together on the invoice. In California and Maryland, a combined “shipping and handling” line pulls the whole amount into tax, because the state cannot separate the exempt shipping portion from the taxable handling portion.7California Department of Tax and Fee Administration. Shipping and Delivery Charges (Publication 100) To preserve the exemption, list shipping and handling as two separate charges and keep records showing the actual cost of each.
The same logic applies if a seller marks the shipping charge up beyond what the carrier actually billed. California caps the exempt amount at the seller’s real cost of delivery. Charge $12 for shipping when the postage was $7, and the $5 difference is taxable. Without records of individual delivery costs, tax can apply to the whole charge.6California Department of Tax and Fee Administration. Sales and Use Tax Regulations – Regulation 1628
Mixed Orders With Taxable and Nontaxable Items
When one shipment contains both taxable and nontaxable items, the shipping charge usually has to be split between the two, with only the taxable portion taxed.
States that follow the Streamlined Sales Tax Agreement allow sellers to allocate shipping using either of two methods:
- By sales price: divide the shipping charge based on each item’s share of the total order value. If $30 of a $100 order is taxable, 30% of the shipping is taxable.
- By weight: divide the shipping charge based on each item’s share of the total shipment weight.
California uses the sales-price method. In a delivery with $10 of exempt groceries and $5 of taxable merchandise, one-third of the delivery charge is subject to tax.13California Department of Tax and Fee Administration. Transportation Charges – Regulation 1628
New York goes the other way by default. A single delivery charge on a mixed bill is treated as part of the taxable portion unless the seller allocates it fairly between the taxable and nontaxable items. Only the amount allocated to the taxable items is then taxed.1New York Department of Taxation and Finance. Shipping and Delivery Charges
Even in states that tax all delivery on taxable sales, like Texas and Pennsylvania, allocation still matters, because the nontaxable items in a mixed shipment carry no tax on their share of the delivery cost.
States With No General Sales Tax
Five states impose no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. With no underlying tax on retail sales, shipping and handling are not taxed at the state level in any of them.
Alaska is the wrinkle. More than 100 local governments there levy their own sales taxes, with rates from 1% to 7%.14Office of the State Assessor, Division of Community and Regional Affairs. Alaska Tax Facts Whether those local taxes apply to delivery charges depends on the specific borough or city ordinance, so sellers shipping to Alaska addresses need to check local rules. Delaware, Montana, New Hampshire, and Oregon impose no local general sales taxes on retail transactions either.
Shipping to Buyers in Other States
If you sell online and ship into other states, you may have to collect that state’s sales tax, including any tax on shipping, once your sales into the state cross certain thresholds. The 2018 Supreme Court decision in South Dakota v. Wayfair lets states require out-of-state sellers to collect sales tax based on economic activity in the state, without any physical presence there.
The most common threshold is $100,000 in annual sales into the state, which roughly 38 states use either as the sole trigger or as one of two triggers.15Streamlined Sales Tax. Remote Seller State Guidance Some states add a transaction-count trigger of 200 or more separate sales, though several have moved away from that count. Illinois eliminates the transaction threshold as of January 2026 and will use only the dollar amount.16Illinois.gov. FY 2026-12, Destination-Based Retailers’ Occupation Tax Changes A few states set higher dollar thresholds: California uses $500,000, and Alabama and Mississippi each use $250,000. Once you cross a state’s threshold, you are responsible for collecting and remitting that state’s tax on all applicable charges, shipping included when the destination state taxes it.
Quick Reference
Rules change, so confirm the current law in any state where you collect. As a starting point:
- Always taxable on a taxable sale, even if separately stated: Georgia, Minnesota, New York, Pennsylvania, Texas.
- Exempt if separately stated, subject to conditions: California (third-party carrier required), Florida (delivery must be avoidable by the buyer), Illinois, Maryland (loses exemption if combined with handling), Michigan, Virginia.
- Handling still taxable even when shipping is exempt: California, Maryland, Virginia.
- No state-level sales tax: Alaska (local taxes may apply), Delaware, Montana, New Hampshire, Oregon.
Sellers operating across multiple states should review their invoicing to ensure shipping and handling are labeled accurately and broken out where doing so affects taxability. Collecting the wrong amount, in either direction, can produce underpayment penalties and interest during a state audit.